CASADE

How Useful Are Millennium Development Goals And Sustainable Development Goals To The Developing World?

A fundamental principle that guides productive exchanges and relations amongst nations is a variant of the Kantian Moral Imperative that insists that nations treat each other as each would like to be treated. What is striking about the Millennium Development Goals (MDGs) is that there was a goal for “ensuring environmental sustainability,” but that there wasn’t a goal for economic growth or increased productivity or prosperity—or even one aiming to achieve population-wide improvement in material wellbeing. In fact, economic growth wasn’t a goal, or even a target, but only an indicator of the MDGs. Instead, the MDGs focused on very specific and very low-bar goals. For example, the only goal for education was “completing primary school”—nothing about learning or school quality, nothing about secondary education, nothing about technical training or job skills, and nothing about university or research. This is because, in my view, the MDGs were an exercise in addressing the weak coalition for aid in rich countries by strengthening support among post-materialists in the aid coalition; the developing countries were simply seen as signatories to endorse the goals chosen and championed by international bureaucrats and rich countries.

In contrast, in the debate over the post-2015 Sustainable Development Goals (SDGs), the nexus moved into the UN General Assembly, beginning with the 67th Session. Given the priority that developing country citizens (and governments) themselves give to economic growth, the latest draft of the SDGs includes the following formulation: “Goal 8: Promote sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all,” which includes a numerical target of seven percent per annum for the least developed. Moreover, the post-2015 agenda is being defined with much higher aspirations across the board; for instance, the education goal now includes quality of learning in primary school, secondary school, technical and vocational training, and university. This makes the SDGs less of an exercise in mobilizing and prioritizing development assistance for donors, and more an articulation of broad goals of development. This can be understood as serving as the basis of raising four critical points that will serve as benchmarks for how development assistance trends will be affected in the period ahead.

The first point is higher standards. For quite some time, the rich countries have been engaged in a political process of attempting to establish “dollar a day” as a relevant poverty standard. This is in part to make development assistance more attractive to the developing country post-materialist coalition, pitching income gains as a means to reduce “extreme poverty.” But the “dollar a day” standard for poverty is below nearly all developing countries’ own national poverty lines—and most countries that have revised their poverty lines over time have raised them. So the “dollar a day” standard actually attempts to define development down, which creates tensions with the agenda of developing country citizens and their governments—let me underline that in no country do people limit their aspirations to simply rising above “dollar a day.” Whereas the MDGs (and many development organizations) focused only on the artificial and arbitrary “dollar a day” definition of “extreme” poverty, the draft SDGs include goals on national poverty targets.

The second point has to do with the ‘safeguards versus infrastructure’ debate. With any big infrastructure project—like a dam or a highway or a power plant—there is a need for a review of its impact on the natural environment, on those displaced by land acquisition, and on society in general. Every major infrastructure project has such risks, and adequate consideration of them is essential to decision-making. However, there are also risks in not moving ahead with infrastructure, as this leaves people less connected into a productive economy—without access to safe water, electrical power, decent transport, and so on. Developing country governments are more cognizant of both risks and potential damage from infrastructure of the wrong kind versus the damage from too little infrastructure. This is why organizations that have been more able to avoid the impositions of the rich Western country post-materialist coalition (e.g. CAF, the regional development banks) have been able to expand their funding of infrastructure dramatically. This is also why countries are creating their own mechanisms for financing infrastructure. Yet any attempts at changes in “safeguards” policies in rich country-controlled organizations like the World Bank are resisted fiercely.

The third point relates to tensions inside multilateral development organizations. In October 2013 the World Bank adopted a new corporate strategy that, in effect, said ‘we don’t care about the well-being of the majority of the population in our “partner” countries.’ Of course, for public relations purposes, the goals were stated as, for instance, “eradicate extreme poverty” (defined as “dollar a day” and thus excluding five billion people) and “shared prosperity” (which includes only the bottom 40 percent), but the effect is the same: ‘we only care about improvements in the wellbeing of less than the majority.’

Why would a global development organization (especially one that already has an Articles of Agreement that already legally specifies its purposes) adopt a strategy that explicitly excludes the majority of people in the world as intended beneficiaries of its developmental actions? The World Bank’s governance structure is such that countries vote their shares of paid-in capital, and hence this new strategy formulation was a means of securing the interests of the rich country voters at the expense of the interests of developing country citizens. Perhaps this is a necessary compromise, but it is one to which there is increasing resistance from developing country governments. They are, not surprisingly, coming together to create organizations that don’t explicitly contradict their legitimate goal of trying to benefit all of their citizens.

The final point revolves around the difficult domestic politics of rich country bilateral development agencies. The shifting coalitions in rich country politics have made it harder to support free standing organizations for development assistance with broad national development agendas. Some countries, like Canada and Australia, have eliminated their free standing development assistance agencies by merging them into their foreign affairs or trade ministries. In the United States, the main expansion to development assistance was the creation of the President’s Emergency Plan for AIDS Relief (PEPFAR). While there is no question that addressing HIV/AIDS is a development priority, in 2012 this one program accounted for more spending than what USAID spent on infrastructure, agriculture, good governance, education, administration and oversight, environment, growth, conflict mitigation and reconciliation, and private sector competitiveness combined. If, as has been announced, the United Kingdom’s Department for International Development withdraws from India and South Africa in 2015, then it will have operations in countries with only 1.1 billion of the developing world’s 5.8 billion people—and this from a country that has pledged to increase total aid to the 0.7 percent of GDP target set by the MDGs more than a decade ago.

by CASADE

Rule Of Law, Credibility, And Control of Corruption As Means To Growth And Sustainable Development

Paul Sumner, Glenna Huo.

Although the institution of Rule of Law (ROL) and its counterpart, Control of Corruption (COC), are well known in economic development literature as being essential to economic growth and investment, policy makers in developed countries may be unaware of, or may have forgotten the lessons learned in the developing world. The United States of America, for example, used to have a strong tradition of ROL but has been moving away from this concept in the past few years. This shift has been documented by various agencies who rate countries for such things as perceived corruption and certainty of ROL. For example, the 2012 Index of Economic Freedom, an index produced by the Heritage Foundation, which measures such things as rule of law and other aspects of economic freedom, shows that the United States has been falling in economic freedom since 2008. Among the areas listed where the United States has suffered a decline are freedom from corruption, government spending, monetary freedom, and investment freedom. Since 2009, the United States fell out of the category of Free Economies, which have a score of 80-100, and by 2012 had a country score of 76.3 (Miller, Holmes and Feulner, 2012).

Likewise, in the 2012 Global Competitiveness Report published by the World Economic Forum, the United States has fallen by 6 notches since the 2008-2009 report, from # 1 to # 7, in terms of global competitiveness. This report covers a long list of factors, including good governance and rule of law. As a matter of fact, the United States has sunk the most among all countries covered by this report. Additionally, the Corruption Perceptions Index, which is produced by Transparency International, shows the USA falling from 18th to 24th in ranking, measured by relative lack of corruption, between the 2008 and the 2011 reports. These indices provide some evidence that national and international research groups do indeed perceive a decline in the USA in the areas of ROL or COC. But why should this be important? Why would such things as corruption or rule of law matter to the economic growth or the condition of a developed economy?

We intend to answer these questions by exploring the importance of the institutions of ROL and COC in the process of economic development. We begin with a short summary of the history of economic development literature, focusing generally on institutions and more specifically on ROL and COC.

The Importance of Institutions to Economic Development

For decades economists have been intrigued by a general question: Why is the pace of economic development so uneven across different countries? There are basically three ways to explain why some countries have economies that grow faster than others. One can use an economic theory of growth, one can focus on climate and geography, or one can focus on institutions that exist and either support or resist the growth of markets (Gwartney, Holcombe and Lawson 2006). This paper takes an institutional approach, starting with a definition of institutions. We argue that, although the ROL and COC are two closely-tied mechanisms to maintain fair and orderly transactions in any economic system, different countries do weigh them differently and the choice made by the government in this respect tends to lead to differing paths of economic growth. This is because the certainty and credibility of any transaction contract, which are crucial to ensuring the sustainability of all economic transactions, can be significantly affected by the dominant mode of governance for economic activities, knowingly or unknowingly chosen by the government of a nation. At the end of the paper, we will examine the cases of some emerging economies to demonstrate this phenomenon.

There is a difference between institutions and organizations. This was stressed by North (1990), who maintained that institutions are broader and include non- organizations such as rule of law, or absence of corruption in addition to traditional organizations, such as national banks. Institutions can be defined as “sets of formal, rule-based constraints on the behavior of individual and collective actors.” As such, this construct is different from just cultural norms or beliefs. It does include codes for behavior, however. These codes may descend from or be endogenous to cultural beliefs and norms (Dunning and Pop-Eleches, 2004).

Why do institutions matter? There is clear evidence showing that the quality of institutions significantly affects the pace of a nation’s economic development. According to some research findings (Gwartney, Holcombe, and Lawson, 2006), countries with higher-quality institutions, as measured by the EFW indexi, both achieve more growth per unit of investment and attract a higher level of private investment as a share of GDP. Additionally, private investment was approximately 25% more productive.

Rule of Law vs. Control of Corruption

Although institutional quality can be measured in many different ways (Gwartney and Lawson, 2003), all measures are, by and large, geared to the purpose of keeping the uncertainty low and credibility high for economic transactions so that all parties involved would have sufficient confidence in their outcome. In light of such a fundamental purpose, the most important function played by a national government is making sure that the rule of law is abided by all participants of the economic system, or at least ensuring that the level of corruption in the country is minimized.

According to Kaufmann, Kraay, and Mastruzzi (2010), the rule of law (ROL) indicator captures perceptions of the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and violence. All of these seem to be anchored to the presence of formal legal systems in a country. By contrast, the control of corruption (COC) indicator captures perceptions of the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as "capture" of the state by elites and private interests (Kaufmann, Kraay, & Mastruzzi, 2010). Although they differ from each other in terms of dependence on written laws, uniformity of application, and methods of enforcement, both of them may help reduce uncertainty experienced by transaction partners and increase the credibility of the ruler or the government perceived by its people.

Aixala’ and Fabro (2008) determined that the most significant institutional variables for the achievement of high growth depended “on the income levels of countries.” They found that for the wealthiest countries, “rule of law is fundamental while, for poor countries, it is control of corruption.” The results obtained by them show, firstly, that institutional infrastructure is a fundamental factor in explaining the economic growth of countries, as can be seen from the improvement in the explanatory capacity of a model of growth when institutional variables are included. As to which aspects of institutional quality are the most important, the answer differs according to the sample considered: “Rule of Law’” in the rich countries and “Control of Corruption” in the poor countries (Aixala’ & Fabro, 2008).

Although the difference found between rich countries and poor countries by Aixala’ and Fabro might be valid and substantial, we think the rich-poor dichotomy actually reflects different stages of economic development. Understandably, underdeveloped or emerging economies are more likely to be characterized by lower per capita income. As the economic development continues to progress, people in these countries also become richer. To a certain extent, of course, these two options are similar and overlapped. When a ruler does not observe the rule of law with respect to all citizens, but instead gives exceptions to the law to friends and donors, or enforces the law differently depending upon whether the person of interest is a friend or donor, this is clearly a form of corruption. On the flip side, even the most sophisticated, well-developed laws would not function effectively to ensure orderly, equitable economic transactions in a country unless they were rigorously enforced under a strong governmental leadership.

Interestingly, the existence of one corrupt ruler does not imply that the ruler would encourage or tolerate other governmental officials to behave corruptly. Rather, the rulers of some countries may still crack down on bribery, nepotism, or cronyism when they detect such occurrences. We can find numerous examples in recent human history when rulers or dictators took the responsibility of creating “clean politics” with their own hands, such as the former president of Philippines, Ferdinand Marcos, former president of Egypt, Hosni Mubarak, and former dictator of North Korea, Kim Jong-Il. With the self-serving behavior of these dictators being excluded, the governmental officers under their administrations were fairly clean of corrupt conducts due to the fear of being severely punished.

The case of the Philippines is particularly noteworthy. Before the “Four Little Tigers” (Taiwan, Hong Kong, Singapore, and South Korea) emerged in East Asia, the Republic of the Philippines was the envy of Asia in terms of economic prosperity. To be sure, under Marcos regime (1965 - 1986), the Philippines' external debt rose from $360 million in 1962 to $28.3 billion in 1986, making the Philippines one of the most indebted countries in Asia, and a sizable amount of this money went to Marcos family and friends in the form of behest loans (Boyce, 1993). However, during that period the economic development progressed and citizens of Philippines enjoyed higher standards of living than people in the neighboring countries. Eventually, the lack of true democracy under Marcos administration and the general resentment of Marcos’s dictatorship brought his regime to demise. The collapse of the Marcos regime marked the beginning of more prevalent democracy enjoyed by Filipinos, but it failed to bring a turnaround to the Philippine economy, which started to decline in last few years of Marcos administration. In essence, after Marcos’s loss of power had left a void in the control of corruption, the rule of law failed to take hold in the Philippines. An expertii of Asian Political Economy interviewed by one of the authors of this paper put it bluntly: “When Ferdinand Marcos was still in charge, only the president and a few confidants could take bribery. After Marcos lost his power, almost every governmental official in Philippines felt free to take advantage of their authorities to enrich their own pockets.” That may be an overstatement -- there are still many clean governmental officials in today’s Philippines -- but it might be one of the reasons why the Philippines had missed the opportunity to become one of the Little Tigers of Asia.

We can also find numerous countries where pervasive application of the rule of law did not successfully prevent corruption from happening. In those cases, economic growth in the country was still curtailed or even reversed. One piece of evidence is found in Mauro’S (1995) empirical studies, which confirmed that corruption could lower private investment, thereby reducing economic growth even in the sub-samples of countries in which bureaucratic regulations are very cumbersome.

The Puzzle of Uneven Economic Growth across Nations

Researchers of economic development are oftentimes puzzled by the uneven pace of economic recovery experienced by different countries in the same region. Using data from UNICEF (2001), for instance, Dunning and Pop-Eleches (2004) pointed out that “Economic performance in Poland, Slovenia and Hungary declined less and recovered much faster than in the former Soviet Republics, many of which suffered catastrophic declines in the early transition years and experienced only modest recoveries afterwards.” Five of the former Soviet satellite countries had, by 1997, rebounded to levels that were less than 40% of their 1989 GDP. Traditional approaches, such as examining the speed of reform, or the differences between organizations, have failed to explain the differences in results.

Another, more recent example of uneven growth can be seen in the African Cheetahsiii, countries where economic rates of growth are much higher than average. The term African Cheetahs also is used to describe the new generation of African leaders who are returning to their African countries with education and job experience from the United States, Canada and Europe with new ideas of good governance and rejection of the old and corrupt way of doing business. These countries, where the Cheetahs are having an impact, are experiencing rates of economic development that many of the more traditional predictors of success would not have foreseen, based upon the history of governance in these countries. The one seeming consistency in these countries is certainty -- certainty that the rule of law with respect to contracts will be enforced.

Additionally, Dunning and Pop-Eleches (2004) point out that “analysts might not have expected the one-party Chinese Communist state to be able to commit to respecting the property of private industry, which much current literature tends to see as the sine qua non of economic growth. Yet institutions for growth, based in part on private accumulation, seem nonetheless to have arisen.” They contend that what economists traditionally see as wrong institutions sometimes “engender growth,” and that high-growth countries have widely varied formal institutions. This seeming conflict may be better explained as having occurred as a result of economic evolution, rather than formal developmental planning. We believe that, if an evolutionary theory indeed explains the differential growth rates of various economies, it must be because different nations have gone through different paths of institutional evolution or are in different stages of the same path. In light of the similar political histories that characterized the aforementioned nations in the past half century, however, the first explanation seems to be more plausible than the second one.

Indeed, there is a school of development thought based in economic geography that has its roots in Darwinian Evolution. In this vein of thought, countries develop their own evolutionary path based on past inheritances. They are dependent on this path, with its habits, rules, norms, heredity and continuity. New paths spring forth either from crisis or innovation (Boschma & Lambooy, 1999; Martin & Sunley, 2006; Hodgson, 2004; MacKinnon et al, 2009). Based on this school of thought, different economies might have fared differently in recovering from a recession or catastrophic decline, not necessarily because they were in different stages of the common type of institutional evolution but because each country has followed a unique path defined by its own habits, rules, norms, heredity and continuity.

Continuous Evolution or Disruptive Evolution?

Even if we grant that each country would follow a unique path to develop its institutions, there is no guarantee that such an evolution process would be smooth and continuous. Disruption could be caused by a nation-specific or regional financial crisis (e.g. the Asian Financial Crisis in 1997), a major economic downturn (e.g. the Great Depression in 1930s), a major war between two countries (e.g. the eight-year war between China and Japan in 1937-1945), or a catastrophic terrorist action (e.g. the 9/11 attacks). Although the scope of the disruption caused by different events might vary widely, inevitably a nation’s economic institutions would feel the pressure for change. If institutions are globally imposed and exogenous to a country’s own development path, social choices are preempted, which might have developed more effective ones. This mono-cropping of institutions “reduces incentives for states and citizens to build choice-making institutions, and therefore diminishes the likelihood that such institutions will emerge.” (Dunning and Pop-Eleches, 2004; Evans, 1995) As the pace of globalization accelerated in early 21st century, this seems to be increasingly the case.

We posit that, so long as a nation can maintain steady economic growth, the government is likely to stick to the dominant mode of governance currently used, whether it is the rule of law or control of corruption. Nevertheless, when an economy suffers from a decline due to the failure of its current mode of governance in weathering a local or global disruption, it is likely to shift to the other direction in order to restore the trajectory of growth.

The next question is: Which way is likely to be the direction of the shift when the economic growth is disrupted? Theoretically, the shift could occur either way. When a country is already depending on the rule of law to maintain the economic order, a major crisis could force the government to temporarily take unorthodox measures to control the problem. Conversely, when a sophisticated formal system of laws is not in place yet and the nation has relied on one or a few strong leaders to reduce corruption, an economic downturn could push the government toward the development of a more comprehensive and enforceable formal legal system to contain corruption. In the long run, however, the rule of law will more likely ensure more sustainable economic stability if not economic growth. That is the reason why all the developed economies in the world today are relying on the rule of law to maintain equitable and fair economic transactions.

The Role of Credibility in Moderating Uncertainty

Whether we consider the rule of law or control of corruption as a means to reduce uncertainty for market transactions, credibility of the government is always a key denominator. Although uncertainty is universally present in every country or region, the level of governmental credibility has never been uniform across different nations. In other words, despite the fundamental mission of every government to help reduce uncertainty for its constituents, how effective a government is in accomplishing such a mission depends heavily upon its creditability in the eyes of its people. Obviously, an honest government gains more credibility, thereby reducing the uncertainty experienced by all participants of the economy. Nonetheless, what if we are certain the government always lies? Can the certainty of a dishonest government lead to more uncertainty? Indeed, if the rule of law is not followed and the government plays favoritism, we are reduced to guessing who will be the favored or disfavored instead of being certain of outcomes. Then, the economic act becomes a greater gamble for all players in the market. In this section we will discuss the dynamics of the interplay of credibility and uncertainty.

Informed by decades of researchers, both Henisz (2000) and Sumner and Williams (2010) remind us that uncertainty can have profoundly negative impacts on markets. Henisz focused on economic reforms in developing economies, specifically on the idea of “credible and non-credible reforms.” Sumner and Williams focused on the importance of “hard” as opposed to “fuzzy” contracts in the context of a developed country which was taking a step backwards institutionally, to a lower level of legal certainty. Both described the impact of arbitrariness as leading to higher hurdle rates in investment, which leads to decreased investment, and derivatively, to lower GDP or GDP growth. It is important to the conclusions of this paper to understand the logic that increased uncertainty is a mathematically provable cause of slowed economic investment and growth. This fact is not up for debate. The logic for arriving at this conclusion rests in asset valuation methodologies whereby future cash flows are discounted using a hurdle rate, or required rate of return.

The Role of Credibility in Moderating Rent-Seeking

In addition to the above impact of uncertainty on investment, Giertz and Feldman (2012) point out in a study of uncertain tax policy that whenever there is uncertainty as to outcomes, market participants engage in rent-seeking. Exactly why increased rent-seeking should be an problem for society has been and could be the subject for much discussion (and indeed, further research) in the areas of ethics, sustainability (wherein rent-seeking represents an unproductive use of resources), or temporal resource allocation study (where such behaviors could possibly result in sequential stages of greater and greater inefficiency). But our focus here is on the impact of uncertainty on development and investment.

 Perfect certainty in economic decision-making is impossible, due to the random nature of the world where business is transacted. Due to the mathematical relationship between the level of risk and the NPV of an investment, however, anything that reduces uncertainty provides a greater possibility of economic expansion and investment, ceteris paribus. Additionally, economic actors may engage in rent- seeking behavior, which also has deleterious effects on economic growth. Rule of law has value because it lowers uncertainty. Economic actors know the legal consequences of their actions and can therefore plan with certainty in at least this one aspect of their existence. The reverse is also true. Lack of certainty, due to a lack of rule of law, or due to the presence of corruption, or due to a lack of credibility of government, can have a damaging effect on economic growth. A quick glance at the history of economic development in many countries seems to indicate that the transition to an economy fully governed by the rule of law is rarely smooth. Catastrophic disruptions, caused by political turmoil or financial crises, may either create an opportunity for the national leaders to seize extraordinary power for their personal gains or force the government to temporarily take unconstitutional actions in order to bring things back under control. What happened in the Philippines, China, and other developing economies suggests that it is indeed possible for a country where the rule of law has not taken root to enjoy some economic growth for a number of years. In the long run, however, sustainable economic growth can be achieved only through the credibility and certainty ensured by the rule of law.

This fact has long had acceptance in the economic development literature, but it is important for policy-makers in developed countries to remember this as well. Inasmuch as economic growth may stall in developing countries where there is corruption, a developed country where there is a rise in corruption or a failure of the rule of law may also face serious consequences in its economic outlook, as economic actors cut back investment and increase rent-seeking activity.

by CASADE

Counterterrorism Efforts and Push-Backs: What Next?

The need to counter terroristic insurgency is urgent and clear, but the means employed to achieve this objective cannot always be transparent nor guaranteed to solve the problem permanently. The influx of foreign jihadist fighters in Africa, specifically in Libya, northern Nigeria and Somalia point to the sad reality that military force alone is insufficient, and usually instigate reactionary and sympathetic alliance from those who harbor similar sentiments as the terrorists. Indiscriminate use of military force that cause collateral damage to innocents may also provoke such sympathy for the jihadists, and enrage Western democracies that place high premium on human rights and the rule of law. While each case of terroristic insurgency is informed by different impulses, the essential ingredients remain the same: a sense of injustice and marginalization of rights, poverty, illiteracy, and misguided ideology. In his recent article on the inevitability of “push-backs” from military operations against terrorist insurgents, Professor Daniel Byman provides a cogent analysis of a deadly cycle of counterterrorism efforts by the United States and ‘blowbacks” that have followed. Below are his compelling thoughts on this matter:

That counterterrorism instruments often fail is no surprise—terrorists are tough targets, after all. At times, however, these instruments can actually backfire. Such “blowback” can take many forms and is difficult to measure and identify.

In today’s context, blowback is most commonly used to refer to the nasty consequences that result from the use of certain counterterrorism tools: angering masses of people and thus creating more sympathy for the terrorists and, presumably, increasing their fundraising and recruitment capabilities and making it easier for them to operate. The U.S. invasion of Iraq, for example, led to a surge in anger among Muslims around the world and was cited as a reason for conducting terrorist attacks. Attempted Times Square bomber Faisal Shahzad, radical American-Yemeni cleric Anwar al-Awlaki, and the Tsarnaev brothers, who carried out the Boston marathon bombing, all cited the U.S. war in Iraq as one of the motivations for their actions against the United States.

U.S. drone strikes, especially those in Pakistan, are criticized for outraging local populations and creating more sympathy for the terrorists. Retired U.S. Marine Corps General James E. Cartwright, former vice chairman of the Joint Chiefs of Staff and a former adviser to President Obama, has argued: “We’re seeing that blowback…If you’re trying to kill your way to a solution, no matter how precise you are, you’re going to upset people even if they’re not targeted.” Following a particularly high-profile U.S. drone strike targeting Pakistani Taliban leader Hakimullah Meshud, one newspaper reported that “Former cricket star Imran Khan, chairman of the Pakistan Tehreek-e-Insaf party, has built a massive following in denouncing the ongoing U.S. drone campaign in his native country.” Such U.S. actions that outrage the population allow the terrorists to portray themselves as Robin Hoods and make the people more willing to overlook their brutality, extreme ideology, and repeated attacks on fellow Muslims.

More subtly, attacking Al Qaeda or its estranged relatives like the Islamic State might lead to an increase in attacks on the United States. Al Qaeda has many enemies, and if the United States hits it hard, it might decide to shift its resources away from those other enemies and toward the United States. As the Al Qaeda core is already strongly anti-U.S., this argument has little resonance when it comes to Zawahiri and his closest followers, but it does apply to Al Qaeda’s affiliates and groups with similar ideologies that have no operational relationship, like Ansar-e Sharia in Libya. On the one hand, counterterrorism officials don’t want to stand idly by as these groups grow stronger and then suddenly find themselves confronted with a major threat. On the other hand, although these groups share Al Qaeda’s hatred of the United States, their energies are focused locally and regionally. Even Al Qaeda in the Arabian Peninsula (AQAP), the only Al Qaeda affiliate so far to have directly targeted the U.S. homeland, devotes the bulk of its resources to carrying out attacks in Yemen. This debate is particularly germane to the issue of U.S. attacks on the Islamic State: U.S. officials fear that this group might eventually focus on attacking the U.S. homeland, but they also worry that U.S. attacks on the group make this focus more likely. And the Islamic State’s fighters include many Westerners who could be sent back to carry out attacks at home.

Human rights activists and legal scholars contend that torture, extrajudicial killings, and indefinite detention subvert the U.S. image as a champion of the rule of law. With less legitimacy, the United States could lose the international cooperation that is so vital for disrupting Al Qaeda. However, this is unlikely: Al Qaeda opposes many regimes, and even those not on its enemies list usually oppose terrorism. A bigger challenge is that a decline in legitimacy makes it harder for allies to openly cooperate with the United States. High-profile actions like the Abu Ghraib torture scandal and reports of a U.S. drone strike mistakenly targeting a wedding party in Yemen make it more politically costly for U.S. allies.

The damage to the United States may be greater outside the counterterrorism realm. Former President Jimmy Carter wrote in a 2012 op-ed in The New York Times that because of the drone campaign, “our country can no longer speak with moral authority” on human rights issues. To the extent that U.S. leverage on human rights issues comes from perceptions that the United States adheres to international standards of behavior in its foreign policy, many counterterrorism programs undermine U.S. status.

It is easy to argue by anecdote one way or another, but assessing broader trends usually suffers from a lack of data. Terrorism scholars lack a general theory of recruitment—and if we don’t really know why people become terrorists in general, it is hard to judge how a controversial instrument affects radicalization and recruitment.

We can and do look at the individual statements of terrorists for why they join. Many cite a familiar litany of grievances, such as U.S. support for Israel or the U.S. military presence in the Muslim world. The problem is that the list is long, and it is hard to tell if one grievance would simply be replaced by another in the mind of an angry, idealistic, and excitable young volunteer. Instead of hating America or the West for ten reasons, they now hate the West for nine. This problem is particularly acute because conspiracy theories run amok in the Muslim world. In no Muslim country do more than 30 percent of the people think that Arabs carried out the 9/11 attacks. Many Muslims believe 9/11 was an inside job, either orchestrated by Jews to cement U.S. support for Israel against Muslims or by the Bush administration to justify the Iraq war (and, another personal favorite from former Iranian president Ahmadinejad—that the West is destroying Iran’s rain clouds). With such a conspiratorial mindset, even benign U.S. moves are seen as suspect. The U.S.-led intervention in Kosovo, which liberated many Muslims from the brutal Serb regime in Belgrade, was perceived by many to be a deliberate U.S. plan to allow the Serbs to kill many Muslims and, only when the butchery was done, pretend to act.

Nor are all terrorists created equal. Part of the logic of the drone program is that if leaders are removed or forced to stay on the run, the followers will be unable to function. So even if the death of a leader leads five more people to join the group in outrage, the group may remain weaker as the skilled individual is not easily replaced.

Although blowback is difficult to determine and measure, that doesn’t mean it doesn’t exist—and some things like torture are inherently wrong even if blowback is minimal. The United States and its allies should be on the lookout for signs of blowback, watching the discourse among jihadists from their testimonials as well as social media sites like Twitter to see which actions are particularly hated. Particularly important is judging how counterterrorism will affect the actions of different terrorist groups. Killing one Al Shabaab leader by drone, for example, would be counterproductive if it were to convince the group as a whole to shift its focus and begin aggressively targeting the United States. Such care is at the heart of thinking strategically about counterterrorism: the United States needs to ensure that the terrorist narrative is discredited as well as defeat individual terrorists.

by CASADE

Youth Employment In Africa: What To Do When Informal Is Normal

Shantayanan Devarajan, Chief Economist World Bank’s Africa Region.

In low-income African countries, most people cannot afford to be unemployed. Lacking any significant safety net, 70 to 80 percent of the labor force ekes out a living by working in low-productivity, informal farms or household enterprises. Private-sector wage and salary jobs have been growing at a fairly rapid clip—at 7.3 percent a year between 1992 and 2005 in Uganda, but this growth is from such a small base that it cannot come close to absorbing the 7 million to 10 million young people entering the labor force every year. Furthermore, some of these young people are not qualified for the wage jobs that are available. As a result, most young people will end up working in the same place as their parents—small farms or household enterprises. Taking the example of Uganda again, under optimistic assumptions about economic growth and wage-employment creation, the share of the labor force in informal activities will only fall from 79 percent today to 74 percent in 2020. In short, informal is normal.

The challenge of youth employment in Africa, therefore, is not just to create more wage and salary jobs—important as this may be—but to increase the productivity, and hence earnings, of the majority of young people who will be employed in informal farms and household enterprises. How can this be done? In general, workers’ productivity can be increased by (i) “demand-side” measures, such as better infrastructure and business climate, that lower the costs of production and thus increase the demand for labor; and (ii) “supply-side” measures that improve the skills of workers. In the case of farms, agricultural development is already geared toward increasing agricultural productivity. This will result in higher incomes but lower demand for labor in agriculture. This is how all economies develop; Africa is no exception. In the case of household enterprises (where the farm labor will move to), most are tiny—mom-and-pop or pop-and-son shops—that do not benefit from capital investment and economies of scale of larger enterprises. Small and medium enterprises that hire 5 to 20 people enjoy higher productivity. The problem is that very few of the household enterprises grow into larger ones; most remain very small or die.

There appears to be greater scope for supply-side measures. People with a primary education or less are disproportionately concentrated in the informal sector. By increasing the skills of those who leave school, we can increase their productivity in farm and nonfarm household enterprises. With higher skills, new entrants can increase their earnings by moving out of the farm sector and eventually the household-enterprise sector. Such an investment will not be lost if the worker moves out of the informal sector: they can take their human capital with them.

How can the skills of these new entrants be increased? Even among students who have completed primary school, a disturbingly high share has difficulty with reading and writing. A survey in Tanzania showed that, among seventh-grade students, 20 percent could not read a sentence in Kiswahili, 30 percent could not perform a two-digit multiplication problem, and 50 percent could not read English, which is the language of instruction in secondary school. One reason for these disappointing results is that teachers in public primary schools in Tanzania are absent 23 percent of the time. When present, they spend just over two hours a day teaching. And only 11 percent of the teachers had minimal language skills. Thus, increasing informal workers’ productivity by strengthening their skills requires reforms in basic education—making teachers more accountable to students, and politicians accountable for delivering on education outcomes.

Does this mean that there should be no effort on the demand side? No. Large-scale efforts are unlikely to work, especially if workers are eventually going to move out of agriculture. But it is possible for local governments to support the growth of informal nonfarm-sector enterprises by enabling them to conduct business—rather than suppressing them for violating property rights. Increasing access to financial services would also help these capital-strapped enterprises.

Finally, what about the wage and salary sector? Jobs in factories and services will be the final destination for all workers (possibly over a generation), so the growth of this sector is clearly important. Achieving this growth will involve a multitude of efforts to raise the competitiveness of the economy, with a better investment climate and improved infrastructure the main ingredients. Programs that support matching the skills of educated workers (secondary school and university graduates) to jobs will probably not see returns as high as those produced by simply creating more formal-sector jobs.

In sum, because most young Africans will work in informal farms and household enterprises, the challenge of increasing their productivity needs to be met by first, increasing their basic skills, which they can take with them when they move to new enterprises; and second, creating jobs in the formal sector by improving the economy’s competitiveness, so that this sector can absorb more qualified workers into a productive workforce.

by CASADE

How Many Nigerians are Choosing Neutrality?

Bukola Bolarinwa.

On a recent taxi ride in Abuja, I asked the driver whom he would be voting for in the upcoming elections. He said he preferred the incumbent President Goodluck Jonathan because he believed the main opponent, General Mohammed Buhari, was too much of an Islamic fundamentalist. He narrated his various issues with the former dictator, which are echoed by most of the opposition. On the other hand he expressed his dissatisfaction with the current administration and the worsening levels of impunity of government officials and the ruling class. He concluded by saying that they were just as bad as each other and he would not be voting for either.

This view has over the weeks running up to the election been one shared by a surprisingly large number of people. That is, citizens who have the required Permanent voter cards (PVC) and are choosing not to exercise their right to vote. Our cynicism nurtured by a culture of low expectations is at an all time high.Voting is generally seen as a civic duty, as well as a right. Although voter turn outs are expected to be much higher than the previous elections, it is interesting to analyse the cross section of registered voters who choose not to vote, not out of disenfranchisement or fear, but out of a disbelief in the democratic process. Most Nigerians have an active interest in politics and young Nigerians are a lot more aware of the political process compared to the Western world. Despite this, the general feeling is that neither party or candidate will considerably improve their lives.

Neutrality seems a lot more rampant amongst the educated and well informed population, as they are less likely to vote based solely on religious, ethnic or social lines. The distrust of the political system, politicians and the entire democratic process seems unfortunately to be at an all time high. The mass cross-carpeting of politicians along party lines in the run up to the elections also seems to have further re-enforced the feeling that there are no fundamental principles guiding the party’s policies.

There is little to no difference in the manifesto, agenda and promises of both political parties and candidates. In the sixteen years of democratic elections in Nigeria, the parties have campaigned on key issues that have plagued the nation since its birth -  poverty reduction, insecurity, better infrastructure, improved electricity supply, education, adequate healthcare and more recently job creation and tackling corruption. The Nigerian economy has grown to become the largest in Africa and there has been an emerging middle class. There have been marked improvements in a number of sectors over the past decades, with Nigeria’s economy growing at a rate of 8%, much higher than predicted and thus cementing itself as the African giant. Unfortunately, none of the previous governments has been able to deliver on one of those campaign promises. All programs and policies that have been put in place have overwhelmingly failed. The electricity situation in particular has not seen any marked improvements despite its privatisation and the millions of foreign investments that have been pumped into it. This state of affairs holds true for most of the other crumbling sectors in the economy.

It is therefore unsurprising that a large number of Nigerians, especially those who voted in the previous elections, have chosen to stay neutral in the coming elections. A number of those who have never voted also believe that the electoral system is corrupt and voting will be rigged despite the use of digital card readers. This disillusionment goes beyond the electoral and political system alone. There is discontentment with the candidates, their manifestos, agendas, parties and the entire democratic system of the country.

Whoever emerges the winner on the 28^th of March has an uphill battle, not only because of the large scale economic and socio- political problems they will inherit, but also the ongoing war against militants in the Northeastern region of the country. The winner will have to instil confidence in the electorate that democracy is the only system that can achieve the goals of the nation. This might seem like an issue for the back burner, but the continued dissatisfaction of the populace in the democratic process is unsustainable at best and dangerous at worst.

The Arab spring and the Syrian war are recent catastrophic examples of what happens when nations refuse to feel the collective pulse of the citizenry, and examine what it is crying out for. The Biafran war is another example closer to home. Over time disgruntled Nigerians who are unhappy with the system might no longer choose neutrality, but choose to take actions that will not be in the best interest of the nation.

by CASADE